Providers of spread betting services are required to be transparent about risk and take steps to identify vulnerable punters who might be prone to getting in over their heads. In the case of a businessman who lost a seven-figure sum speculating on oil prices, however, the High Court found that those obligations were met.
The successful, self-made entrepreneur speculated that the price of a particular type of oil, which had collapsed during the COVID-19 pandemic, would soon start to rise again. After he placed a series of time-limited spread bets, however, his prediction sadly turned out to be wrong. When the provider via whom he had placed the bets closed his positions, he had lost in excess of £1.8 million.
He later launched proceedings against the provider, seeking his money back plus substantial damages. He asserted that the provider had not done enough to ensure that its service was appropriate for him and had given him misleading information regarding the expiry date of relevant spread betting contracts. But for those lapses, he said that he would neither have placed the bets nor suffered any loss.
Ruling on the case, the Court accepted that one of the provider’s web pages showed a misleading expiry date on which certain positions would be closed and losses or gains crystallised. However, that had no contractual force and accurate information was available elsewhere. The businessman knew that his spread bets were not open ended and was in any event aware of the correct expiry date.
The Court accepted that the provider’s policy on assessing the appropriateness of its products for particular clients did not in certain respects match its actual approach. That, however, did not alter the fact that its information gathering in respect of the businessman was perfectly adequate. He was clearly aware that the trades were risky and the Court formed the view that he was keen to shift blame for his disastrous financial decision-making onto others.
Dismissing the claim, the Court found that the provider was entitled to take account of his extensive experience of high-risk online trading and had not breached industry rules or acted in breach of contract. It was clear that he was prepared to bet on the relevant market rising when every indicator was that it would fall. He simply made very bad decisions and joined the majority of those who engage in spread betting in losing money.